Is Investing My Savings in the Crypto Market a Good Idea in 2023

[Urbandreamer]

I don't have a deep understanding of technical issues, but why has the price of Bitcoin continued to rise in the recent period?

Oh, I forgot to say, welcome to TLF.

[murraypaul]

I don't have a deep understanding of technical issues, but why has the price of Bitcoin continued to rise in the recent period?

Either normal supply and demand, or because Tether is printing billions out of thin air to prop up the price.

Or a little bit of a and a little bit of b.

[1nvest]

Best IMO to keep like with like, invest some of your virtual savings into a virtual currency and you might accumulate enough to buy a virtual house, spend it on a virtual holiday/break, or buy a virtual painting. For your real hard earned savings hold a real currency, backed by the state, and buy real assets, or spend some on a real holiday.

Crypto is still its infancy, once established and proven secure its transaction methodology will be adopted by the banks/state, as part of that they'll kill off virtual currencies that otherwise compete with the states currency.

[Urbandreamer]

Best IMO to keep like with like, invest some of your virtual savings into a virtual currency and you might accumulate enough to buy a virtual house, spend it on a virtual holiday/break, or buy a virtual painting. For your real hard earned savings hold a real currency, backed by the state, and buy real assets, or spend some on a real holiday.

Crypto is still its infancy, once established and proven secure its transaction methodology will be adopted by the banks/state, as part of that they'll kill off virtual currencies that otherwise compete with the states currency.

Ah, but don't forget to learn a bit about what you are doing.
For example, prisoners have in the past been forced to play games in china to get virtual currency.
https://www.theguardian.com/world/2011/ ... aming-scam

Liu says he was one of scores of prisoners forced to play online games to build up credits that prison guards would then trade for real money. The 54-year-old, a former prison guard who was jailed for three years in 2004 for "illegally petitioning" the central government about corruption in his hometown, reckons the operation was even more lucrative than the physical labour that prisoners were also forced to do.

For the record, there is actually a difference between digital money (bitcoin or the £ when spent using a debit card) and virtual currency (the £ that you don't have created so that you can spend it on your credit card and later destroyed when repaid, or gold traded in a online game).

Virtual and digital don't mean the same thing. I think that, without getting into crypto or even money, this link explains the difference for those that are having trouble.
https://thecontentauthority.com/blog/virtual-vs-digital

[ursaminortaur]

Shouldn't this thread be on the "Crypto and NFTs" board which was split off this board sometime ago ?

[Urbandreamer]

Shouldn't this thread be on the "Crypto and NFTs" board which was split off this board sometime ago ?

I'd agree.

BTW, the OP made the post within 10 min of creating an account, so may not have known the boards structure.
They also have not revisited TLF since 10/11.

In simple terms, we should actually question the purpose of this thread at all. I'd recommend letting the thread die and posting on that board if you feel that you have something to say upon subjects better dealt with there, or questions that relate to those subjects.

[GeoffF100]

Crypto has no intrinsic value is very volatile, which would be enough to put me off. Worse perhaps, the banks do not like it. If they allow crypto at all (Starling Bank does not) they often impose restrictions. There are stories on Money Saving Expert where a bank has sniffed crypto and taken draconian action against a customer who dared dabble with it.

[CliffEdge]

Crypto has no intrinsic value is very volatile, which would be enough to put me off. Worse perhaps, the banks do not like it. If they allow crypto at all (Starling Bank does not) they often impose restrictions. There are stories on Money Saving Expert where a bank has sniffed crypto and taken draconian action against a customer who dared dabble with it.

I think banks sniff the possibility of them being forced to compensate those who lose money investing in what they thought were Bitcoin purchases. I wonder why the banks fear such a possibility.

[GeoffF100]

Crypto has no intrinsic value is very volatile, which would be enough to put me off. Worse perhaps, the banks do not like it. If they allow crypto at all (Starling Bank does not) they often impose restrictions. There are stories on Money Saving Expert where a bank has sniffed crypto and taken draconian action against a customer who dared dabble with it.

I think banks sniff the possibility of them being forced to compensate those who lose money investing in what they thought were Bitcoin purchases. I wonder why the banks fear such a possibility.

There are also issues with crypto proceeds coming in. Money laundering. Proceeds of crime. The banks cannot trace back where the money came from.

[Urbandreamer]

I see that this thread has been moved to the right board.

I had decided to ignore posts upon it, while it was on the wrong board.

Ok dealing with them.

Crypto/bitcoin has no intrinsic value, but then neither does ANY fiat currency. You could make arguments that fiat has value because it is trusted as a medium of exchange etc, but NOT while you use unsound arguments about intrinsic value. Doing so you inherently argue that fiat, as in the £, lacking intrinsic value, is worthless.

Banks don't like it because they might be forced to compensate account holders for their own actions. Come on! We regularly hear of people NOT being compensated for push payment fraud that doesn't involve crypto. There is almost certainly a different reason. I personally suspect that they are under pressure from the FCA, who are not happy that Mr Sunak wanted to encourage crypto firms to the UK while a chancellor. (try a web search)

Banks don't like it because they can't trace it.
NO. Banks have for a long time offered services to people of dubious morals. An entire off shore banking industry use to exist to cater for such. It still exists, provided by banks, using shell corporations. What you meant is that governments seek to censor transactions. In your example, money laundering. In other examples, attempts by governments to enforce their wishes without needing that pesky business of their actions being legal.
https://en.wikipedia.org/wiki/Operation_Choke_Point

and other companies that, while operating legally, were said to be at a high risk for fraud and money laundering.

This operation, disclosed in an August 2013 Wall Street Journal story,[2] was officially ended in August 2017,[3] and the FDIC settled multiple lawsuits by promising to Congress additional training for its examiners and to cease issuing "informal" and "unwritten suggestions" to banks.

In Canada the government froze the bank accounts of people on strike. I'm sure that had everything to do with "money laundering". Oh it was quite "legal", because they made it so. They are still trying to justify the hardship done to the children of such people. Apparently that wasn't their intent!
bank account of a single mom with a minimum wage job has been frozen

Strahl shared Brianne's story as concerns grow that scores of ordinary people will no longer be able to pay for food and basics after their accounts were frozen for donating to a group of protesters.

Major Canadian bank apologizes to trucker convoy for freezing accounts

“Please accept our sincere apologies for the frustration and inconvenience this situation may have caused and .....

However nobody is forcing anyone to buy or use crypto/bitcoin. Use it or ignore it. Up to you.

[MuddyBoots]

. Crypto/bitcoin has no intrinsic value, but then neither does ANY fiat currency. You could make arguments that fiat has value because it is trusted as a medium of exchange etc, but NOT while you use unsound arguments about intrinsic value. Doing so you inherently argue that fiat, as in the £, lacking intrinsic value, is worthless.

Thanks Urbandreamer. As a novice to this, the whole thing looks very speculative and gambly to me. Presumably when you hold crypto in an online account it doesn't pay you interest like a savings account? It looks similar to foreign currency trading, hoping that the exchange rate moves in your favour. I think some people do that but it's a risky business.

[Urbandreamer]

Thanks Urbandreamer. As a novice to this, the whole thing looks very speculative and gambly to me. Presumably when you hold crypto in an online account it doesn't pay you interest like a savings account? It looks similar to foreign currency trading, hoping that the exchange rate moves in your favour. I think some people do that but it's a risky business.

You can earn interest on crypto, but I personally would advise against the idea.

Brief explanation of how banks supposedly work.
Banks and institutions like Northern Rock lend money for mortgages etc.
Supposedly they obtain the money that they lend from their depositors (though in fact they create a lot of it out of thin air).
Should depositors lose trust and want their money back you get something known as a "run on the bank" (mortgages can't quickly be liquidated).
You may have seen such in films like "It's a wonderful life", "Mary Poppins" or news reports of Northern Rock from 2007.

The entire fiat system is very dependent upon the function of banks, hence the bank bailout* and the compensation scheme for the "money" that you "have" on deposit.

Such compensation doesn't cover institutions like Revolut (they have no UK banking license) or crypto exchanges.

Many are aware that the crypto exchange FTX turned out to be fraudulent. As it happens I had just spent £200 for 0.01096691 bitcoins shortly before it went bump. I failed to take personal possession in a timely manner and that bitcoin is gone. What would it be worth today if I had managed to take possession? £360. I'd suggest not buying the likes of bitcoin because "the number goes up" though. That seriously IS gambling.

*Banking bailouts: the first crypto was bitcoin in 2009. Data can be associated or embedded in the blockchain. It's well worth viewing the bitcoin genesis block.
Here is an amazon link so that you can claim "got the T'shirt", or just read the data.
https://www.amazon.co.uk/Satoshi-Nakamo ... B07VCXCV3X

[ignotus20]

Banks and institutions like Northern Rock lend money for mortgages etc.

Why use Northern Rock as an example, why not Lloyds, Barclays, HSBC, Nationwide etc.? Did any depositors lose money from the closure of Northern Rock? What about the bondholders?

Crypto (and bitcoin in particular) is an interesting, but flawed, libertarian experiment which ends up creating ponzi schemes, whether by accident or design. In the case of BTC, it is probably the former. The lack of regulation and use of exchanges (which is more or less essential for practical purposes if you want to buy or sell the stuff for money you can actually spend) further corrupts the core principles of crypto and allows hackers, ponzi operators and other 'bad actors' to establish themselves using instruments that were originally established with legitimate intentions.

Crypto might have some potential as a technology to enable the implementation of trustless distributed IT systems but crypto 'coins' or whatever are assets (digital assets) not currencies. Using the platform itself as a means to raise investment capital and provide a proof of concept (or 'eating your own dogfood' as technology types like to say) is also an interesting idea. Ethereum (ETH) is an example, but it still faces the same risks described above. The Ethereum Foundation essentially hacked their own platform a few years ago to correct a flaw that was exploited: https://help.coinbase.com/en/coinbase/g ... -hard-fork

In answer to the original question, "Is Investing My Savings in the Crypto Market a Good Idea in 2023" the short answer is 'no. The more nuanced answer is 'not if you don't mind owning very volatile assets which might become worthless'. It's worth noting that if you had invested in BTC on 1st Jan 2023, you would now be up by about 250% or so. Using contrarian principles to buy crypto has been a profitable strategy in the past - but that doesn't mean it will continue to be one in the future. The next BTC crash might be the last. It is not 'digital gold', it has not existed for very long - and it may or may not last for much longer.

For those interested in some bullish and bearish perspectives, the following links might be useful:

The bull case (as presented by one of the saner commentators) is here: https://www.bytetree.com/atomic/ & https://twitter.com/AtlasPulse
The bear case against crypto is quite well covered by this fellow: https://davidgerard.co.uk/blockchain/

[Urbandreamer]

Banks and institutions like Northern Rock lend money for mortgages etc.

Why use Northern Rock as an example, why not Lloyds, Barclays, HSBC, Nationwide etc.? Did any depositors lose money from the closure of Northern Rock? What about the bondholders?

I used Northern Rock as an example specifically because it overextended upon its mortgage obligations and suffered a bank run. Are you aware of the same happening with the other examples that you gave?

Normal customers were made good by the government, as I indicated. In fact the government nationalized Northern Rock. However you are wrong if you think that everyone was made good. Northern Rock made extensive use of "non-retail" funding. Such business funding is not protected by the UK government.

The point was, since you obviously missed it, that banks make money by loaning long term money while supporting their loans with short term deposits.

The exact same thing can be done with crypto currency, if you desire to earn interest. However the government will not make you good if, as has happened, there is a "bank run" or bad loan.

Here is an example of such events in the crypto field.
https://www.forbes.com/advisor/investin ... s-celsius/

Hence my point, which it seemed that you also missed, that I can't recommend seeking to earn interest upon crypto.

[Urbandreamer]

yes very good if you have idea on it, if not, please learn it first before investing wisely and probably not all the savings.

Wish that I could give more than one rec.

Sure, I'm a convert. But I actually would go further than biztime and argue that you should learn about it even if not planning to invest.
OH and certainly learn before doing anything about it.

Not of course that you actually have a choice, if you do want to use a regulated exchange.
The FCA requires you to take an exam about dog coins before you are allowed to buy bitcoin.

https://www.youtube.com/watch?v=CeN2n3cjuuk
Quiz is about 5 min in.

A bit different from when I opened any of my brokering accounts to buy equities or indeed any bank or building society account.

PS. please, please folks. Do research the subject. There is a ton of info out there. Read it! You can't make an informed choice, unless you are informed.

[1nvest]

I see that this thread has been moved to the right board.

I had decided to ignore posts upon it, while it was on the wrong board.

Ok dealing with them.

Crypto/bitcoin has no intrinsic value, but then neither does ANY fiat currency. You could make arguments that fiat has value because it is trusted as a medium of exchange etc, but NOT while you use unsound arguments about intrinsic value. Doing so you inherently argue that fiat, as in the £, lacking intrinsic value, is worthless.

Banks don't like it because they might be forced to compensate account holders for their own actions. Come on! We regularly hear of people NOT being compensated for push payment fraud that doesn't involve crypto. There is almost certainly a different reason. I personally suspect that they are under pressure from the FCA, who are not happy that Mr Sunak wanted to encourage crypto firms to the UK while a chancellor. (try a web search)

Banks don't like it because they can't trace it.
NO. Banks have for a long time offered services to people of dubious morals. An entire off shore banking industry use to exist to cater for such. It still exists, provided by banks, using shell corporations. What you meant is that governments seek to censor transactions. In your example, money laundering. In other examples, attempts by governments to enforce their wishes without needing that pesky business of their actions being legal.
https://en.wikipedia.org/wiki/Operation_Choke_Point

and other companies that, while operating legally, were said to be at a high risk for fraud and money laundering.

This operation, disclosed in an August 2013 Wall Street Journal story,[2] was officially ended in August 2017,[3] and the FDIC settled multiple lawsuits by promising to Congress additional training for its examiners and to cease issuing "informal" and "unwritten suggestions" to banks.

In Canada the government froze the bank accounts of people on strike. I'm sure that had everything to do with "money laundering". Oh it was quite "legal", because they made it so. They are still trying to justify the hardship done to the children of such people. Apparently that wasn't their intent!
bank account of a single mom with a minimum wage job has been frozen

Strahl shared Brianne's story as concerns grow that scores of ordinary people will no longer be able to pay for food and basics after their accounts were frozen for donating to a group of protesters.

Major Canadian bank apologizes to trucker convoy for freezing accounts

“Please accept our sincere apologies for the frustration and inconvenience this situation may have caused and .....

However nobody is forcing anyone to buy or use crypto/bitcoin. Use it or ignore it. Up to you.

'Deposit' money into a bank savings account - and that's really just a loan, you lending to the bank often at a low interest rate, becomes the banks money along with a IOU record on their books.

Buy shares and more often that's a case of where the broker will take your money and buy the shares you named, in THEIR (brokers) own name. Again more a form of loan.

Show me your wealth ... if you can't physically touch and move it, its not yours, its just a loan, subject to terms and conditions that others set, and that may varied at any time. Even your own home/land could be 'compulsory purchased' at a rate that someone else sets.

The 'trick' is to diversify, not have all your eggs in one basket only to see that basket being crushed. Crypto could be part of that, but the more sensible choice would be to have only a relatively light loading into that, perhaps 10% or less. If for instance the Pound lost 90% of its value then Crypto in Pounds might rise 10 fold in price. That might not help much against buying foreign stuff/goods, but in relative terms you'll be much better off than another who solely held Pounds. .... OR alternatively holding another currency such as Dollars could serve just as equally as well under such conditions. So fundamentally it boils down to whether you might prefer something like Dollars, perhaps invested in US stocks, where the Dollar is backed by the US state, or a Crypto currency - a virtual thing that isn't backed by anything.

The only real reason to hold Crypto is to in part diversify to be partially 'outside' of other regulated systems, such as the Pound, Dollar, bank deposits, brokers ...etc., but in turn Crypto also has its own equivalent counter parties risks (miners, platforms ...etc.).

All-told, a little Crypto wont hurt too much if it goes belly up, and adds to diversification. Personally I hold none, but if I did I'd likely not risk any more than a 5% weighting. Must admit that I am a little tempted - just to have the accounts already up and running, that might serve as a element of insurance, already geared up to say convert large amounts of £££'s to Crypto and have that dispatched elsewhere, overseas, and converted into something else there ... more quickly than if the accounts had to be freshly opened. On that basis and even 5% would be excessive for me, I'd likely be down at 1% or less weighting.